Morgan Stanley is sticking by its head of global interest rate trading, Glenn Hadden, amid a probe of his trading at a previous employer.

The New York securities firm is keeping Hadden in his current role and has no plans to replace him, according to people familiar with the matter.

Hadden, one of the bond market's top Treasury traders, is being investigated for trades he made in 2008 while working at Morgan Stanley rival Goldman Sachs, according to a recent regulatory filing.

The investigation is being led by CME Group, which owns the exchange where Treasury bond futures are traded. The probe was reported earlier by the New York Times.

The CME has the power to ban a person from trading on its exchanges, which would be a major setback for any Wall Street bond trader. But it has used that power sparingly, and the conduct being investigated in this case doesn't yet appear to rise to that level, one person familiar with the investigation said.

A Morgan Stanley spokesman confirmed that Hadden still works as the firm's global head of rates.

Hadden's lawyer in the matter, James Benjamin of Akin Gump Strauss Hauer & Feld, said in a statement: "The CME matter concerns technical risk management activity in a one minute period four years ago during which Hadden acted properly and followed established market practice. There is no legal or factual basis for any suggestion of market manipulation."

"If the CME is still looking at something from four years ago, they believe there's something there," said one executive following the case. "Whether it's provable or not is another question."

Hadden, an important player in trying to revive Morgan Stanley's bond trading operation, was notified in recent months that he was being investigated for certain "Treasury futures orders" placed in December 2008, while he was working at Goldman, according to an updated report from the Financial Industry Regulatory Authority. Finra tracks enforcement actions against brokers and many Wall Street traders.

Known as an aggressive trader, Hadden stands out a firm that has pared back its risky bets under chairman and chief executive James Gorman. Hadden left Goldman at the end of 2010, after being sidelined when the Federal Reserve Bank of New York complained about some of his trades, people familiar with his exit said.

After a short hiatus, Hadden joined Morgan Stanley in March 2011, according to the Finra records. Morgan Stanley officials knew of the issues with the Goldman trades and the Fed, but felt there wasn't a serious concern there, people familiar with the matter said.

Hadden and Morgan Stanley didn't know about the CME investigation until recent months, according to people familiar with the case. Hadden discussed the matter with legal officials at Morgan Stanley after they were notified. He is being represented by outside counsel because the conduct being investigated occurred while he was at a rival firm.

Morgan's support for Hadden isn't unexpected. He is a key part of efforts to revive a bond trading unit that has slumped in recent years.

Those two areas are Hadden's forte, and he has generally done well at Morgan Stanley, despite some inflation bets that generated losses last year. Hadden has also pushed Morgan's bond trading desks to do more trades electronically, in an effort to cut costs.